Model of Government Development for MSMEs Through One Village One Product (OVOP) Concept by the Cooperatives and MSMEs Office in Rokan Hilir Regency

The development of MSMEs in Indonesia has gone well, but for various crises, inaction is still felt, so efforts to accelerate the development of MSMEs are still included in the development and monitoring programs and the attention of various stakeholders. The MSME Development Program is one of the instruments to increase people's purchasing power as well as a safety valve in a monetary crisis because the phenomenon in most countries proves that MSMEs can act as dynamics and stabilizers of the national economy in addition to being one of the motors of national economic growth [1]. Although MSMEs have shown a role in improving the national economy, they still face various obstacles and obstacles, both internal and external; this condition is caused by the limitations possessed by MSMEs, especially in Rokan Hilir Regency. These limitations include limited business management capabilities, minimal business facilities, and limited working capital [2]. With such limitations, the problems faced by MSMEs cannot be solved alone but require assistance from the role of Government on policies and strategies for developing potential in solving problems through a coaching approach to obtain protection, facilities, business certainty, and budgets in empowering MSMEs.

The Office of Cooperatives and Small and Medium Enterprises is the implementing elements of the Rokan Hilir Regency Government. The Office of Cooperatives and MSMEs of Rokan Hilir Regency has the task of carrying out the affairs of the Regional Government based on regional autonomy and assistance duties in the field of Cooperatives and Micro, Small, and Medium Enterprises and can be assigned to carry out the implementation of the authority delegated by the Government to the Regent of Rokan Hilir Regency in the context of deconcentration.

The Office of Cooperatives and MSMEs has the responsibility and task of implementing government affairs and assistance duties in the field of Cooperatives, MSMEs and carrying out functions that include coordinating the empowerment, development, and development of Micro, Small, and Medium Enterprises (MSMEs). Development is an effort to improve human resources' technical, theoretical, conceptual, and moral capabilities following the needs of work through training and education. Meanwhile, MSME Development is one of the Government's efforts in development, especially providing opportunities for new entrepreneurs and employment to reduce unemployment.

Various opportunities and expectations exist in MSMEs, but on the other hand, they still face several problems. One of them is that the quality of human resources of MSME actors is still low. The quality of human resources for MSME actors in Rokan Hilir Regency still does not have a broad and modern view, especially in terms of management and improving product quality and business development, so it still requires encouragement and facilitation from the Government in the form of technical and management training. Often development programs are implemented only to solve the fundamental problems of MSMEs, not the root of the problems faced by MSMEs; as a result, the programs implemented tend to be Hit and Run and are based on preconceived notions. In implementing empowerment to improve the quality of human resources for MSME actors, the Office of Cooperatives and MSMEs of Rokan Hilir Regency requires strategies that must be designed appropriately as an effort or steps implemented to achieve a goal related to community empowerment through MSME development.

The local Government and the Office of cooperatives and MSMEs of Rokan Hilir Regency are working together to develop the progress of Micro, small and medium enterprises rapidly. From the data obtained by the progress of MSMEs in 2018-2020. The following is data on the Recapitulation of MSMEs based on the scale of business in Rokan Hilir Regency, namely:

Table 1. Recapitulation of MSMEs in Rokan Hilir Regency based on Business Scale year 2018-2020

Source: Dinas Koperasi dan UMKM Rohil. 2021

From the data above in Table 1, based on the quantity of business scale, there has been an increase in business when compared to 2018 and 2019 data. The following is a table on the recapitulation of MSMEs who received training and guidance in Rokan Hilir Regency in 2018-2020.

Table 2. Recapitulation of MSMEs participating in the 2018-2020 training

Source: Dinas Koperasi and UMKM Rohil. 2021

From the Table 2 above, it can be seen that the number of MSME actors who took part in the training from 2018 - 2019 was small, not comparable to the number of MSMEs. However, in 2020 the Office of Cooperatives and MSMEs of Rokan Hilir Regency conducted training for 81 (eighty-one) MSME participants; this happened due to the rationalization of the Budget for covid-19 handlers.

The limited Budget in 2020 caused the implementation of guidance in the form of training and socialization to be unable to run because the Covid-19 outbreak hit Indonesia and was in the Rokan Hilir district. The impact of covid-19 is the rationalization of the Budget. The Budget is prioritized for covid-19 handlers and the purchase of vaccinations for the community, especially the people of Rokan Hilir Regency. The Budget available to the Office of Cooperatives and MSMEs of Rokan Hilir Regency at the beginning of the fiscal year amounted to Rp. 9,705,014,142, and in June, there was a Rationalization of Anggran to Rp. 7,016,409,029, and the Budget was realized, amounting to Rp. 6,358,838,934. Furthermore, the table of the ease of formulation of micro business entities (Halal Label).

Table 3. Recapitulation of MSME Development for ease of business entity formulation (Halal Label)

Source: Dinas Koperasi and UMKM Rohil. 2021

From the data in Table 3, the number of MSMEs that received the ease of halal label formulation amounted to 60 MSMEs with a percentage of 0.0026%, not covering all the number of MSME actors who received halal labels by the Office of Cooperatives and MSMEs of Rokan Hilir Regency. Next, is the table of permit development carried out by MSME assistance personnel.

Table 4. Recapitulation of MSME OSS permit data in Rokan Hilir Regency

Source: Report on MSME Assistance of the Rohil Cooperatives and MSMEs Office. 2021

From Table 4, the coaching and assistance carried out by the accompanying staff do not cover all existing MSME actors. New ones who received OSS permits amounted to 0.0031% of the number of existing MSMEs.

The accompanying staff is in charge of creating new entrepreneurs, preparing plans for mentoring activities, conducting mentoring and consulting activities, and monitoring and evaluating the progress of MSMEs. The help of accompanying personnel will make it easier for business actors to manage business licenses. The creation of permits accompanied by MSME assistance personnel is an integrated online licensing or usually referred to as single online submission (OSS), is an electronically integrated business license, where this permit is one of the requirements in applying for a loan to a bank that provides a people's business credit facility (KUR) for MSMEs [3].

The increasing development of MSMEs in terms of quantity has not been balanced by the consistent improvement in the quality of MSMEs. The classic problem faced is low productivity [4]. This situation is caused by internal problems faced by MSMEs, namely: The low quality of MSME human resources in management, organization, mastery of technology, and marketing; weak entrepreneurship from MSME actors; and limited access of MSMEs to capital, information technology, and markets, as well as other production factors. Meanwhile, external problems MSMEs face include significant transaction costs due to the unfavorable business climate and the scarcity of raw materials. Acquiring formal legality is still a fundamental problem for MSMEs in Indonesia, following the high costs incurred in managing permits.

The phenomenon in the implementation of programs and activities in the context of coaching and empowering MSMEs has many problems and challenges faced in the field, both internal and external, including:

(1) The low quality of Human Resources (HR) still needs to be improved both organizational, managerial, and knowledge about business opportunities again.

(2) The MSME financing program should receive support from various parties to achieve the expected results.

(3) The limitations of MSMEs in terms of capital and quality need to be a concern for all of us.

(4) Limited ability to master market information and expand product marketing.

(5) Limited technical personnel who supervise MSMEs.

(6) Limited Budget in coaching.

The goal to be achieved in this study is to find a suitable MSME development model by the Rokan Hilir Regency Cooperatives and MSMEs Office to empower the poor through business groups that have been adjusted to the regional economic potential and the level of resource capability.

3.1 The problem faced by MSME include

3.1.1 Internal factors

(1) Lack of funds is the main factor needed to develop the business world. However, unfortunately, Micro, small and medium enterprises lack funds because micro, small and medium enterprises are as long as households.

(2) Human resources are limited. The limited human resources of small micro-enterprises, both formal education and knowledge, and skills, significantly affect the management of their businesses, making it challenging to optimize business development.

(3) Weak business network and small business penetration capabilities. The commercial network is very limited and the penetration power is very low, so the number of products produced is minimal, and the quality of competition is low.

3.1.2 External factors

(1) The business environment has not been conducive to government policies developing UMKM. This can be seen in the unfair competition between small and large entrepreneurs.

(2) Commercial facilities and infrastructure are limited. The lack of information related to advances in science and technology causes them to develop rapidly an infrastructure that does not support business development.

(3) Limited market access. Market access will cause the final product not to be sold competitively in the domestic and international markets.

(4) Access to information is restricted. In addition to obtaining funds, Micro, small, and medium enterprises also have difficulty obtaining information. The lack of information on MSMEs will more or less affect the quality of products or services from the MSME business and other products. As a result, products and services cannot be used because MSMEs cannot enter the export market. However, on the other hand, some products or services can also compete in the international market because they have no way or channel to enter the market and can only circulate in the domestic market.

3.2 MSME development in Rokan Hilir Regency

Currently, the demands of the Government in order to accelerate the realization of the achievement of social welfare are getting bigger. Micro, Small, and Medium Enterprises are one of the alternatives to achieving welfare goals because they are considered capable of creating regional economic development and improving community welfare. The role of the Government in developing MSMEs is increasingly needed, especially in empowering and fostering MSME actors in terms of human resources budget procurement and infrastructure [5].

The Office of Cooperatives and MSMEs of Rokan Hilir Regency is an extension of the Regional Government of Rokan Hilir Regency appointed to overcome problems related to the development of MSMEs in production, processing, marketing, human resources, and infrastructure. The coaching approach carried out by the Cooperatives and MSMEs Office consists of business capital assistance, business management training programs, field coaching (supervision), and evaluation.

Policy directions that support the achievement of the Regional Economic Capacity Building Program through the MSME Development Model, among others:

(1) Facilitating easy access to marketing and capital.

(2) Improving the quality and competence of human resources of business actors;

(3) Creation of a conducive investment climate and increased promotion of the region;

(4) Increased added value and competitive advantage;

(5) Institutional strengthening.

3.2.1 Providing MSME access to capital sources

In addition to the Government, the role of the business world as a Partner Company and The Banking Party is expected to provide support to Micro, Small, and Medium Enterprises (MSMEs) by setting aside part of the company's profits through the Corporate Social Responsibility (CSR) program and the Community Development Partnership Program (PKBL) by providing capital loans and transforming knowledge and business management to the Micro, Small and Medium Enterprises (MSMEs) group which is a Fostered Partner. Business Capital Loan Disbursement Program from Partner Companies (BUMN) which is directly felt by Micro, Small, and Medium Enterprises located in the Rokan Hilir Regency area.

3.2.2 Procurement of coaching and training

The Regional Government, in this case, the Rokan Hilir Regency Government, carries out the Management of Micro, Small, and Medium Enterprises with the following tasks: formulating operational policies in the context of planning, coaching, and developing Micro, small and medium enterprises, making efforts to protect, foster, empower and develop Micro, small and medium enterprises to be able to become reliable and trusted business actors, advancing Micro, small and medium enterprises so that they can compete in the mechanism market. Furthermore, the implementation of coaching is carried out through activities: Providing counseling, training, capacity building, and competence in the field of management and technology development, making guidelines for business development, and providing legal consultation and defense assistance in business opportunities.

MSME development can be done by identifying problems faced by MSMEs, preparing coaching and development programs that follow the problems faced by MSMEs, implementing coaching programs that have been prepared, and supervising the activities of the MSME coaching and development program. In carrying out the guidance and development of MSMEs, there is a scope of guidance covering the fields of production and management, marketing, human resources, and technology [6].

3.2.3 Improved product promotion

The guidance carried out by the Office of Cooperatives and MSMEs is given to MSMEs that have received training. Assistance on marketing products produced by MSMEs through existing exhibitions, both regional exhibitions around Rokan Hilir Regency and exhibitions outside Rokan Hilir Regency and in collaboration with outlets in Rokan Hilir Regency.

Product promotion improvement activities carried out by the Office of Cooperatives and MSMEs of Rokan Hilir Regency are in the form of activities such as bazaars or MSME exhibitions held in crowded places such as Riau Expo, Regency exhibitions, and actual events in Rokan Hilir Regency, MSME actors are invited to participate. In addition, this activity is usually held outside the city and even abroad; this is useful for expanding the marketing network of MSMEs to the international level.

3.2.4 Implementation of the MSME development model through OVOP

The Office of Cooperatives and MSMEs play a crucial role in the MSME Development Model. The Office of Cooperatives and MSMEs of Rokan Hilir Regency can coach and facilitate coaching by developing superior regional products with an image and brand image that describes the Area of Rokan Hilir Regency.

To create highly competitive products, one of the comprehensive strategies that can be implemented is to prioritize only export commodities and utilize the comparative advantages possessed due to the availability of natural resources and create competitive advantages through the development of increasingly skilled human resources with increased technology mastery capabilities [7]. MSME Development Policies with competitive and comparative advantages can create added value, expand job opportunities and obtain optimal foreign exchange. Competitive advantage can be directed through the efficiency of the production process by improving the quality of production factors, technology, bureaucratic restructuring, and human capital. Meanwhile, competitive advantage is increasing competitiveness through price strategies such as reducing production costs [8].

One way to create a competitive advantage for MSMEs in Rokan Hilir Regency is the Cooperatives. MSMEs Office can carry out MSME development with an MSME development model through OVOP. MSME development is not only carried out to find MSME actors who have business startups but also to provide training on human resources, expert assistance, assistance in business facilities and capital, facilitation of IPR (Intellectual Property Rights), and promotional assistance and exhibitions. The MSME development model can be carried out by referring to the One Village One Product (OVOP) program, which provides a form of MSME coaching that can be carried out by the Cooperatives and MSMEs Office, including the guidance and absorption of competent human resources, and capital facilities [8].

The One Village One Product (OVOP) Program, according to the Ministry of Industry of the Republic of Indonesia, is a program or model for MSME development by including (1) Coordination and socialization of MSME programs through One Village One Product (OVOP) in provinces/regencies/cities. (2) Identification, product selection, and certification of MSME products through One Village One Product (OVOP) in the Province / Regency / City. (3) Coaching and Development of MSMEs through One Village One Product (OVOP), and (4) Giving awards to MSME actors [9].

The One Village One Product (OVOP) movement is expected to improve the welfare of the people of rural areas by developing regional economic performance. OVOP or one village one product is an approach or model of developing the potential of a region in an area to produce one product equivalent to a unique and distinctive global value in the region by utilizing local resources. Meanwhile, one village in question can be expanded into sub-districts, regencies/cities, and other regions following the potential and scale of existing businesses. OVOP is a form of clustering of superior products on a micro, small and medium scale (MSMEs) that should be fostered to develop and penetrate a broader market [10].

The purpose of developing superior regional products through the One Village One Product (OVOP) movement is to develop the potential of regional indigenous products in local and global marketing and improve the quality and added value of local products to compete with imported products [11]. Thus, local products will be superior in quality and support good market access. The implementation of the OVOP program is related to the application of three (3) OVOP principles, namely:

(1) Think globally, act locally

(2) Independent and creativity

(3) Development and Empowerment Human Resources

Increasing the effectiveness of MSME development through the One Village One Product (OVOP) development model is expected to be achieved because the alignment of the OVOP shorthand model is emphasized to provide innovative solution mechanisms in the contribution of MSME coaching by the Cooperatives and MSMEs Office of Rokan Hilir Regency in terms of developing MSMEs through improving superior regional products starting from a small scale so that it will facilitate the integration of coaching mapping. Furthermore, the problem of MSME inputs and outputs is expected to be helped because under the auspices of the organized sector, both non-formally (community) and formally (Government) are the Cooperatives and MSMEs Office. In line with that, the concept of coaching can be seen as an effort to realize the interconnectivity that exists in order and the refinement of the elements of the order that are directed so that an order can develop independently. Therefore, in coaching MSMEs, the development model offered is MSME coaching through Triple Helix synergy.

3.2.5 Implementation of the MSME Development model through triple helix

The development of MSME development in Rokan Hilir Regency by the Office of Cooperatives and MSMEs needs to pay attention to the perspective of linkages and commitments from parties called Triple Helix, which includes A (Academician), B (Business), and G (Government). Triple Helix is one of the solutions to the obstacles faced by MSME actors and oversees the creation of mutualism collaboration between the three parties involved [12]. With a clear division of roles from each stakeholder, the existence of planning, mentoring, stages of activities, and joint commitment of stakeholders in strengthening MSMEs in Rokan Hilir Regency, the Office of Cooperatives and MSMEs in its role of carrying out MSME development can provide a positive stimulus to stimulate conducive economic growth and development.

Coaching activities must be implemented through a third party, preferably from academics or universities, because one of the Tri Dharma of Higher Education implementations is community service. This is so that the community can feel universities; one form of implementation of community service is to conduct counseling and guidance to community groups in the MSME sector [13].

To achieve the results on target, the Office of Cooperatives and MSMEs requires cooperation with academic parties. This is intended to carry out teaching, education, training, and community service following the Tridharma of Higher Education objectives. The Budget allocated by the Government to finance research aims to motivate academic research that gives birth to innovation and creative ideas. In this aspect of Triple Helix, the results of academic research are expected to serve the needs of science and as a solution to government problems in determining policies or regulations related to creating social community welfare, primarily through coaching and developing MSMEs [14].

Balancing the roles of the three stakeholders, namely Government, Academics, and Business, is difficult. It takes a continuous and dynamic effort so that the three parties can be expected synergistically and balanced to create an excellent entrepreneurial climate [15-19].